It is deeply depressing to realise that the modestly positive economic data seen over the past six to eight weeks are likely to be the best we can expect for many moons – until well into 2021. That is the rational expectation even if efforts to contain the second Covid wave are, as we all must hope, successful and there is light at the end of the tunnel in the guise of approaching vaccines.

As the latest versions of lockdown across the UK continue to expand in coverage, and look set for a lengthy duration, we can expect to see unemployment and business failures rise exponentially. The rapid growth that we can expect in the latter will result in another upward ratchet in unemployment and downward hit for consumer demand – with a consequent adverse effect on yet more businesses.

The Chancellor was quite correct a couple of weeks back to effectively extend the furlough scheme that has been with us for a while. That will dampen down the impact on incomes of employees and the self-employed, and for a period hold back a significant part of the approaching tidal surge of unemployment. But what this scheme cannot do is assist businesses facing the combined impact of a continuing reduction in demand for their goods and services and substantial debt to Government resulting from loans taken out during the earlier part of this year.

Across the UK some 1.3 million small and medium-scale businesses have taken out £52.3 billion of borrowing from a combination of the business interruption scheme and the bounce-back loan scheme. In Scotland there have been nearly 80,000 loans totalling £2.95 billion. For many small enterprises taking out such loans, and utilising the furlough scheme, will have been the only real option for survival through the lockdown period. They will have been hoping to manage repayment following a rapid victory over the virus, an early return to business as usual and some recovery of revenues lost during the lockdown – as consumers acquired later what they could not buy during the toughest times.

Unfortunately these hopes have not been realised. Hopes for a return to some new form of ‘business as usual’ must now be pushed back to (say) mid-2021. Even then there is unlikely to be a bounce-back in purchases for most businesses. As the Fraser of Allander Institute was the first to point out, we are not facing a "V-shaped" recovery but rather a "K-shape". This implies that some businesses will recover quickly and strongly, but others – the majority I fear of the 80,000 referred to above – will see a slow drag back to previous revenue levels, with no recovery of sales lost during the down phase.

The clear implication is that many of these businesses will be unable to repay the sums due, at least not at the time when interest payments and debt repayment are due to commence. There are estimates that some 40% of this debt will never be repaid, at least not as scheduled at present. That figure is unsurprising. The debt was taken on in extremis – take this or go bust in many cases – and the recovery has not panned out as the optimists may have hoped.

So what to do? There are various options. Many of the businesses could just be allowed to fail, the inevitable casualties of Covid. Or Government could be generous once more, with some debt written off in part or all, or rescheduled to allow for a much extended period of repayment. This would of course result in another major increase in Government expenditure, hiking up once more the deficit and the level of debt to gross domestic product, which are both already frighteningly high.

There may be other options. Perhaps our high street banks will make a tremendous effort to get to know the businesses struggling to survive and identify large numbers which could be nurtured through the troubling times by a combination of medium to long-term bank lending and sound business advice. The Bank of England should look favourably on such initiatives and take what regulatory steps might be necessary to permit, indeed encourage, banks along this road.

There is also a debt to equity possibility – some third party paying off some or all of a company’s debt in exchange for an equity share. This is always a resource-intensive and high-risk option for potential funders; hence the high returns sought for such equity investments. But there must be some way in which high net wealth individuals across Scotland could be encouraged, with Scottish Government support, to identify small and medium-sized enterprises which they believe have a future and are prepared to nurture with funds and advice.

Scotland has a great record of equity investment to develop and grow small businesses. We also have a brand spanking new institution which could play a major role in this post-Covid business recovery process. This is, of course, the Scottish National Investment Bank (SNIB) – bursting with talent and money!

The Government has several priorities which it wishes SNIB to address. However, helping to save a vast number of moribund but potentially vibrant Scottish businesses should come top of the priority pecking order. SNIB could work closely with existing and newly created groups of "business angels" to rescue a high percentage of these companies and hence at least limit the hit through 2021 in terms of unemployment, business failure and poverty. Who knows, if this worked well it could even lead to a sustainable increase in business investment and productivity across Scotland – and a long-term role for SNIB.